Bank of Nova Scotia has struck a deal to sell its Toronto headquarters to Dundee REIT and H&R REIT for about $1.27-billion.

As the only major bank that still owns its main offices, Scotia began to explore a potential sale back in January.

Located at 40 King St. West in the centre of Toronto’s financial district, the property consists of three integrated buildings including the main 68-storey tower with a total of 2-million square feet of office space.

Dundee Corp., which has a strong history with Scotiabank, emerged as the leading bidder early last month, sources told the Financial Post. Details of the purchase were not immediately disclosed, but last month sources said Dundee REIT was looking to take a substantial stake and become the property manager. The estimated price tag at that time was $1.3-billion.

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A sticking point for any deal was how long of a lease the bank was willing to sign, committing it to stay in its current space. In connection with the deal Scotia has agreed to remain as the anchor tenant at the complex for an average 13.5 years, including the main tower and the bank’s adjacent historic headquarters building at 44 King St. West. Scotia currently occupies about 61% of the property which is 99.5% occupied.

The Dundee Group of companies and the Bank of Nova Scotia have had a relationship for many years. A few years ago, Scotiabank stepped in and acquired Dundee Bank, which was experiencing some funding issues. In return, the bank also acquired about 18% of Dundee Wealth. It acquired the rest of the company last year.

Dundee REIT, which Dundee Corp. has an 8% stake in, has been growing rapidly courtesy of some major deals in the last year. In January, Dundee REIT announced a deal to buy Whiterock REIT for about $600-million.

The announcement comes a day before the start of second quarter bank earnings season, with Bank of Montreal set to lead the parade when it reports on Wednesday morning.